Saudi Arabia’s Public Investment Fund (PIF) is continuing its aggressive push into the gaming industry, becoming the biggest foreign shareholder in Japan’s Nintendo and buying a stake in Chinese e-sports company VSPO.
PIF now holds a 8.26% share of Nintendo with more than 107 million shares, each worth JPY5,458 (US$40.64) at close of trading on Monday which brought the total value of the holding to JPY585.3 billion (US$4.36 billion). The fund first started investing in Nintendo shares in May last year and raised its stake by more than 3% since the start of 2023. Since then, Nintendo has emerged as PIF’s second biggest public equity holding outside Saudi Arabia, after its massive stake in NYSE-listed Lucid Motors.
At the same time, PIF’s gaming subsidiary Savvy Games Group pumped US$265 million into Tencent-backed VSPO, becoming the company’s largest equity holder. Savvy CEO Brian Ward said, "This is a significant transaction for Savvy, and gives us a major foothold in the important Asia region. We are looking forward to diversifying our geographic footprint alongside VSPO.”
According to Boston Consulting Group, Saudi Arabia’s gaming market is forecast to reach US$6.8bn by 2030, with a compound annual growth rate of 22%. The aggressive acquisition surge is part of the US$38 billion strategy set out by Crown Prince Mohammed bin Salman in September as the Kingdom seeks to build gaming and e-sports into the Kingdom’s diversification strategy. He said, “Savvy Games Group is one part of our ambitious strategy aiming to make Saudi Arabia the ultimate global hub for the games and esports sector by 2030”.
“We are harnessing the untapped potential across the esports and games sector to diversify our economy, drive innovation in the sector and further scale the entertainment and esports competition offerings across the Kingdom”.
Savvy has five independent subsidiaries to deliver its strategy:
EFG: Its e-sports arm, which was created following Savvy’s earlier acquisition of ESL and Faceit groups
Nine66: Developing an ecosystem for game developers and studios by providing infrastructure, offering talent and participation opportunities, and providing financing and consultancy support. The company is also offering publishing services in the Middle East markets, which allows international developers to enter regional markets.
VOV company: Specialized in building gaming and competition venues.
Savvy Games Studio: A Saudi-based games studio that will offer a range of games to global audiences with specialized teams focusing on mid/core games and seeking to take advantage of acquisition opportunities to attract games and studios under Savvy Group’s umbrella.
Savvy Games Fund: investing in leading publishers and developers and facilitating their establishment of bases in the Kingdom.
Savvy’s programs focus on the private equity side of PIF’s gaming strategy, including:
SAR50 billion (US$13.3 billion) earmarked for the acquisition and development of a leading game publisher to become a strategic development partner.
SAR70 billion (US$18.7 billion) in minority stake investments in key companies that support Savvy’s game development agenda.
SAR20 billion (US$5.3 billion) invested into mature industry partners who add value and expertise to Savvy’s portfolio.
SAR2 billion (US$0.5 billion) in diversified investments in industry disruptors to grow early-stage games and esports companies.
In addition to the stakes in Nintendo and VSPO, PIF has brought into its gaming and e-sports portfolio the following assets, both directly and via Savvy:
NYSE listed equity stakes in Activision Blizzard (worth US$2.9 billion at end-2022), Electronic Arts (US$1.96 billion), and Take-Two Interactive (US$1.19 billion) – together worth US$6.1 billion, built up from Q4 2020.
Stakes in Tosho-listed Capcom (US$552 million) and Nexon (US$1.88 billion), which together with Nintendo comprise a US$6.8 billion holding.
An 8.1% stake in Sweden’s Embracer Group, purchased for US$1.05 billion in June 2022.
Full ownership of ESL Gaming and Faceit in January 2022, which were merged to form the ESL Faceit Group (EFG) with a combined value of US$1.5 billion.
Altogether, PIF’s major transactions in the gaming and e-sports sector total around US$15.5 billion to date and the fund is still planning more acquisitions as well as adding value to its holdings. The scale of PIF’s ambition is far bigger than dominating the domestic market. And the signs are that PIF is looking to turn its planned futuristic NEOM City into the gaming equivalent of Silicon Valley.